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Brussels, 24 June 2010

Direct taxation: Commission formally requests the United Kingdom to amend income tax rules for seafarers

The European Commission has requested the United Kingdom to change its income tax provisions, which allow a tax deduction for the earnings of seafarers who are resident in the UK but do not allowthe same deduction for seafarers who are not resident in the UK. The Commission considers these rules to be discriminatory and to constitute a restriction on the free movement of people, in breach of the UK's obligations under EU law. The Commission's request to the UK takes the form of a reasoned opinion under EU infringement procedures. In the absence of a satisfactory response within two months, the Commission may refer the UK to the EU's Court of Justice.

The tax deduction in question is equal to the amount of taxable income for the period during which seafarers have worked in the UK i.e. it is essentially an exemption of the relevant earnings. In the Commission's view, such a deduction is an objective element of taxation (i.e. is not related to the taxpayer's personal and family situation) and should be granted equally to resident taxpayers and non-resident taxpayers exercising their right to the free movement of workers within the EU.

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